The Money Advice Service has suggested guidance needs to move closer to regulated advice to ensure the success of pension freedoms.
Speaking to Money Marketing following the organisation’s latest results, MAS chief executive Caroline Rookes says the scope of guidance needs to be reviewed to help savers make the right decisions on accessing their pension pot.
Rookes says: “Pension freedoms have undoubtedly created a different context and more complexities for people on relatively modest incomes.
“There are more people with smaller sums of money that want probably more help than what has traditionally been given in terms of what to do next. We have our tools that tell people want their options are, and what the implications are of those options, but what we can’t do is say to people ‘in your circumstances this is what you should do’. And that is probably want people want.”
But Rookes says given pension freedoms are creating more demand for help and information, and the ongoing work of the Financial Advice Market Review, there is an opportunity to review how guidance is working.
She says: “I think there is scope to look at guidance and think about whether it is possible to move further towards the regulated boundary. Of course the advice review is looking at it through the other lens of whether there are ways of creating an advice product for want of a better word that isn’t so comprehensive or all-embracing as regulated advice.
“There is a space which needs to be looked at again in the light of what has been happening on the pensions front. If the pension flexibilities are going to be successful, and we all want them to be, we need to make sure that people feel confident to make the choices that they’ve been given.”
The MAS’s latest figures show over 54,800 consumers have used the organisation’s retirement adviser directory since it launched in April. Over 20,500 users, or 37 per cent, have gone on to contact an adviser as a result.
Rookes says the organisation is working more closely with The Pensions Advisory Service, and says a lot of the pensions-related queries MAS receives are passed directly to TPAS.
She says: “With all of our work, but with pensions particularly, we want to make sure people are getting the most effective and appropriate advice or guidance for them.
“The vast majority of pension calls are put straight through to TPAS because we know it is a complex subject and they are much more expert than we are on those technical issues.”
Rookes adds: “Picking up on Christine Farnish’s recommendations, and this is reflected in our business plan for next year, we want to make sure we are not duplicating work. What we are doing is directing people to help, whether it is through us or another organisation that can provide the appropriate support consumers need.”
The Farnish review, published last year, called for the MAS to slash its £43m money advice budget and called for the organisation to be restructured.